Britain is among the most enthusiastic regulators, so a Brexit vote will not
reduce the burden on regulation on the City of London, say fund managers

Quitting the EU will not suddenly slash the burden of red tape on the City of London and Britain's financial sector, a group of fund management bosses told MPs.

Despite the tide of regulation from Brussels, the industry groups argued that many of the rules were set on a global level before being implemented by the EU, while others are invented and imposed by UK politicians and regulators rather than those from the continent.

Individual asset managers and hedge funds are split over the relative merits of staying in or leaving the EU, but the industry leaders told the Treasury Select Committee that when looking at regulation alone, a Brexit may not bring the benefits that its backers hope to see.

Andrew Tyrie chairs the Treasury Select Committee, which is investigating the potential impact of the UK leaving the EU Photo: Micha Theiner/City AM/Rex Features

"The benefits [of EU membership] continue to outweigh the burdens," said Guy Sears from the Investment Association, a group which represents more than 200 businesses that manage assets worth more than £5 trillion.

"To the extent that there are burdens, the EU is reviewing it. And one mustn’t forget, the UK has introduced its own regulations that go beyond those of Europe or are tougher…the UK has never been slow to go further than Europe."

Mr Sears was joined by Jiri Krol from the Alternative Investment Management Association, who said that some EU regulations were necessary in the wake of the financial crisis, and even when bad rules have come into force, there is no guarantee that an independent Britain would do anything better.

Tough EU regulations have hit the City of London, but fund managers are not convinced that Brexit would help Photo: Getty Images

“There are things we felt went too far, for example in the short-selling regulations we disagree with some of the outcomes, but some of them were supported by the UK government as well, so we don’t feel there would be a different outcome in the future," he told the Committee, which is headed by Andrew Tyrie MP.

John Barrass, from the Wealth Management Association, said that in the case of tighter retail investment restrictions the arguments for remaining in the EU are "a finer cut", but agreed that British regulators are also tough.

"Some legislation from Europe was in fact developed here and then exported to Europe, so costs are not all European," Mr Barrass said.

All of the groups said reforms to the current structure of the EU's legislative process would be helpful, particularly calling for more transparency in the way the trialogue discussions - the negotiations between the European Council, Commission and Parliament - are conducted.